NADA calls on automakers to drop stair-step incentives

NADA calls on automakers to drop stair-step incentives

In an editorial that will run in next weeks edition of Automotive News, NADA will say in a full page ad that stair step incentives are bad for franchised auto dealers and bad for consumers while calling on all automakers to drop the programs.

NADAs opposition to stair step incentive programs has been long running, dating back to their introduction more than 30 years ago.

Dealers of all sizes have recognized the inherent unfairness of a manufacturers discriminatory pricing that tilts the playing field in favor of some dealers, NADA chairman Bill Underrinner says in the editorial. He notes that Mike Jackson, chairman and CEO of AutoNation, shared his view of stair-step incentive programs quoting him in a recent presentation when he said The practice is out of place in todays marketplace, where customers demand transparency and that they undercut the confidence, goodwill and integrity around your pricing in the eyes of the customer.

NADA has had a long-standing position in support of a level playing field, meaning lawful, equal and fair treatment by a manufacturer for ALL its dealers, both large and small. Underrriner notes, problematically, that manufacturer incentive pricing programs sometimes create short-term incentives that favor the larger, urban dealerships to the detriment of the smaller, more rural ones. Recent history also shows that the long-term effects of discriminatory programs are to marginalize the smaller dealers and place them at a competitive disadvantage in their marketplace. These programs also have a tendency to cause confusion among consumers and dealers as to the actual dealer cost of vehicles. This leads to consumer doubt and mistrust that reduces the value of the manufacturers brand. It also undercuts the goodwill between consumer and dealer. This is certainly not good business for either the OEM or the dealer, Underrinner says.

The best way to maintain a level playing field is for factories to focus on what they do so well: build quality cars and trucks and avoid disparate treatment of their dealers that can limit their ability to compete. But then let dealers do what they do best, which is to vigorously compete for the customers business, Underrinner concludes.